Credit Risk

Monitoring credit risk across all activities and all locations, from retail loans and overdrafts to Letters of Credit and Forward Contracts, is all-important in today’s volatile financial markets. To protect and maximise the efficient use of capital, effective management of exposures in lending and other business areas requiring capital, cover is essential, particularly where large exposures to specific customers or groups of customers are involved.

Equation allows risk management staff to set limits, then monitor exposure against those limits in a dynamic environment, taking into account risk factors, guarantees, collateral and netting agreements. Equation enables real-time limit checks, enquiries and reports on exposures with supporting data, and with multiple views using the dimensions of country, instrument, customer groups and intermediate group, industry and currency.

In Equation, limit categories are extremely flexible, with user-definable limit descriptions, and configurable account and deal types. Exposures can be calculated in a number of ways, including; debit values only, the net value of debit and credits or the gross value of debits and credits. Additionally, each limit category may be weighted, so that only a percentage of the transaction amount is included in the limit utilisation. Future limit adjustments, where limits are increased or decreased at a specified future date can be in advance of the date, thereby ensuring that limit changes are made smoothly, effectively and efficiently.

Market Risk

In Equation, market risk management is provided via the integration of Misys’ market-leading treasury and capital markets solution - OPICS. The system provides a complete risk management tool for traders, portfolio managers, risk managers, asset / liability managers and corporate treasurers. The system’s key features include:

• Aggregation and dissection of risk measures;
• Benchmarking and stress testing;
• Cash flow analysis;
• Credit and exposure management;
• Hedging, live and historical information feeds;
• Market risk statistics;
• Performance analysis;
• Value at risk;
• Scenario and what-if analysis.

The system uses the Riskmetrics methodology, allowing daily / monthly volatilities and correlations to be imported. Users define time horizons and can see their diversified and un-diversified risk as well as cash flows. Macro facilities for regulatory reporting design and graphical / tabular representations of data are available. Real-time VaR monitoring allows users to view the movements of a portfolio’s position as it changes in a graphical view.

Operational Risk

Equation provides a range of facilities to support the management of operational risk, from using automation and straight-through-processing wherever possible to eliminate the errors caused by disconnects between process steps and manual intervention. Examples of this include the way Equation handles inward and outward SWIFT messages and the automation of limit review processing.

Global Risk

Misys’ Global Risk Management solution enables data generated across multiple international locations to be collected, consolidated and stored. The system provides sophisticated, high performance global risk analysis and is typically used by banks to consolidate the risk information from multiple, often disparate systems. Powered by a central risk model, Misys Risk Vision gathers transactions together to provide a single, global view of bank exposure.

Limits can be maintained centrally for customers, groups, countries and regions. They can be viewed and amended on-line, from any location. Risk Vision helps banks optimise their risk capital by removing the need for build limit redundancy across systems through centralised limit allocation and management.